covers december 2013 - bizsolindia services pvt. ltd. · recently there was a study conducted by a...

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Bizsol UPDATE December - 2013

In these columns a couple of months back I hadwritten that the world is turning left. Yes indeed.The concern about income inequalities took centre

stage recently in that utopian country calledSwitzerland - a population more equal than in anyother country. If a rich and prosperous country likeSwitzerland is grappling with this issue, the mattermust be serious indeed. Recently the citizens of thiscountry participated in a referendum to put a cap onsalaries paid to their corporate honchos. The intentionwas to put a cap in such a way that no one in anorganisation can draw more than 12 times theearnings of the lowest paid employee of the sameorganisation. It was called the 1:12 proposal. TheSwiss has the reputation of being the best pay-masters in the world besides being ranked 3rd in itsability to retain talent. The proposal was rejected bythe electorate. If it had gone through there would havebeen a mass exodus of talent from that country. Thecorporate czars in India might be delighted to see theresults and also must have been impressed by thearguments advanced against such caps in the run upto the referendum. Fortunately for them there is nosystem of referendum on such issues in India. Onecould imagine what would be the outcome if a similarissue had been put to vote in India. However, thecorporates would be well advised to be circumspectabout such income disparities lest one day populismand demagoguery could rule over reasons and logicunlike what happened in Switzerland.

The entire country was united while celebrating theachievement of Sachin Tendulkar when he wasconferred the Bharat Ratna except perhaps oneperson - the other recipient of the nation's highestcivilian honour. Oh no it was not that the honour andthe attendant limelight was being shared. When theannouncement was made about such an honourbeing bestowed on Dr CNR Rao, an eminent scientist,

FROM THE DESK OF THE CHAIRMAN

the headlines and tickers screamed that 'Rao alsogot the Bharat Ratna'. Those in the newsrooms andthe pressrooms could have been a little moresensitive. When such an achievement is beingcelebrated no person should feel slighted directly orindirectly, intentionally or unintentionally.

Politicians as a class in the country should be derivingsome vicarious, if not sadistic, pleasure this last monthor so. The two most vocal critics of their acts ofomissions and commissions had been the judiciaryand the media. With allegations surfacing against aformer Supreme Court judge for sexual harassmentof a female intern and the editor of Tehelka beingarraigned in another alleged rape charge large cansof worms are being let loose. Though the Tehelkacase dominated the airways and newsprint, theallegations against the judge of the apex court is moreserious from the point of what this development couldlead to. Predictably there were demands for him toresign on moral grounds from his post as theChairman of the Human Rights Committee of WestBengal even before the committee appointed by theSupreme Court came to a conclusion. The opinionseems to be divided on this issue. Moralaccountability, no doubt, reflects the value systemsof the society. With the changed provisions in thestatute governing sexual harassment, molestationand rape, men in positions of power, especially thejudges, would be sitting ducks for being targeted byvested interest groups. If judges were to resign onmoral grounds on such allegations being made, thisspecie would move towards extinction sooner thanlater. One only hopes that in our hurry to remedy thepast misdeeds of men in power we do not swing tothe other extreme. It would then be a case of throwingthe baby out with the bathwater.

With the leading political parties commanding so littlecredibility the so called snoop scandal implicating the

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Chief Minister of Gujarat has flown off at a tangent.Under no stretch of imagination the actions of the stategovernment can be justified in a civilised society. Atone level, the government for whatever reasonsinvaded the privacy of an individual which by itself isunpardonable. As if that is not enough the full mightof the state machinery intended to deal with terrorismrelated issued was deployed to do this job. Undernormal circumstances these are no less than seriouscrimes committed by the state itself. The Congress istrying its level best to make it into a major issue; butto no avail. When the accuser himself is infamous forusing state machineries to serve its purpose thecharges levelled by the Congress do not seem to stick.That is the tragedy. The evolving snoopgate isperhaps the most serious issue which has come outin the open in recent times. It also gives a glimpse ofwhat kind of a price one would pay for goodgovernance if Narendra Modi and his party come topower.

Recently there was a study conducted by a US basedagency about what should be an ideal model forimparting education in schools. It is seen that thestudents from Finland and South Korea are at thetop. A research was undertaken to see what makesthem special. The outcome was startling. Theapproaches to education followed by these countriesare diametrically opposite! The Finnish model allowsthe children to learn at their own pace with no pressureof any nature put on them. On the other hand theKorean children are forced to cram as much aspossible and a little more. The researchers term thesetwo models as 'Utopian' model and 'Pressure Cooker'model. Both have come up trumps! There is no prizefor guessing where we stand between these twomodels.

By the time this issue reaches you the results of thesemi final round of elections would be out. By allaccounts the BJP is set to sweep the cow belt andare now in an upbeat mood. The only thorn in theflesh is the Aam Aadmi Party in Delhi which seems tobe giving nightmares to both the Congress and theBJP. Though it may not really give any indication ofhow the parties would fare in the next generalelections, the BJP would approach the polls with a lotmore confidence. By all accounts, anticipating theoutcome, the Congress gives the impression that the

coming general elections is one they would rather loseso that after overcoming the anti-incumbency it cancome back to power in the subsequent election whichcould happen sooner than later. The history is repletewith instances of such strategies. That also explainswhy Rahul Gandhi is not throwing his hat in the ringand is content leading the party from the side-lines, ifnot behind. He must now be preparing for his role asthe Opposition leader, a role he is practicing eventoday by criticising his own party off and on.

It is strange that the same set of facts evokes suchextreme and opposite reactions. The recent deal theUS made with Iran is a case in point. While Israelcalled it a 'historical mistake', Saudi Arabia sulked andJordan criticised President Obama. But theinternational community as a whole barring theseexceptions welcomed this step. One of the reasonsobviously is that everyone is weary of a war and hencehates war mongering of all kinds. On his second termObama is looking for some kind of lasting legacy thanjust starting or ending another war. With Americabecoming less and less dependent on oil from MiddleEast the writing is on the wall. The strategic interestof the US in this region would progressively diminish.All the countries in this region including Israel arecoming to terms with this changed reality. There arethose who will lose their numero uno position as afriend of the US as many perceive an Iran without itsnuclear threat may be a more reliable and stable allyof the US than the ones like Afghanistan and Pakistan.

Recently there was an incidence of the son of aminster in the Maharashtra cabinet being arrestedfor vandalising a toll booth. If someone were tocompile the statistics for the favourite targets forattacks in India, undoubtedly it would be the toll boothsacross the country on the highways. One canunderstand the tendency of those in power like theministers and the bureaucrats feeling peeved onbeing stopped on the road along with the ordinarycitizens. After all, they are not ordinary. But then atsome level they are also reflecting the sentiments ofordinary persons who also resent the payment of tollfor some reason. Being held up at the toll nakas alsodoes not help matters. Even though the chargescollected may not be significant, the act of makingthe payment is anathema to the user of the road. Thatis some fodder for the psychologists to work on.

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Some called him a genius and some others calledhim a prodigal. Jignesh Shah was perhaps both rolledinto one. One can gauge the business acumen hepossesses when he became the most spectacularrising star in Indian business firmament in the lastdecade or so. His was a fairy-tale story which couldinspire any one in any part of the world. Unfortunatelyfor him and for all those who believe in ways to makingit big in double quick time his fall from grace was alsosimilarly spectacular. With the NSEL Exchange scamhitting the roof, his reputation as a whiz kid and hispersonal wealth have both taken a hit. As of now mostpeople who know him refrain from attributing anypersonal culpability to him for the fraud but everyoneis nearly unanimous in their opinion that there wereissues of due diligence and accountability which hecannot escape from. Shah dreamt of becoming thetechnology partner for Nasdaq once upon a time. Thefall from grace had been steep and profound. It musthave been painful for Shah to be ousted from MCX-SX, a stock exchange he set up against all oddsfighting a lone battle against the established playersin the market and the establishment itself. Shah whowas the hero of the folklore has suddenly become apariah. As we go to Press the news is out that Shah'sassets have been attached by the authorities. Themoral of the story: there is no short cut to successeven for the prodigals.

The much awaited verdict in the Aarushi Talwarmurder case is finally out. The trial court held theparents of Aarushi guilty of murdering her. This wasone case which had captured the attention of themiddle class in India as nothing else has. However,the verdict did not bring a final closure to this sordidsaga. The judgment has raised more questions thananswers. If it is a case of miscarriage of justice it is a

double tragedy for the Talwars. On the one hand theylose their only child and on top of it they are beingpunished for killing her. If it is indeed a case of travestyof justice the media more than the judiciary has totake the blame. This is also an object lesson for whatan over-hyped media can do or undo.

As we go to Press news is coming in that theGovernment is making another attempt to introducethe Communal Violence Bill in the winter session ofthe Parliament. The Prime-Minister-in-waiting haswritten to the Prime Minister of the day opposing theBill. In the din no one really knows what it is and whois being targeted. More importantly what safeguardshave been built into the Bill to prevent its abuse. Trueto the title of the Bill both the support and oppositionto the Bill have been violent. No one is willing to believethat the Bill is good for the people of this country,coming as it does, from a government which has noshred of credibility left.

Nelson Mandela is no more. We pay homage to thatgreat man who taught humanity the true meaning ofreconciliation and peace. His greatest contribution wasnot that he fought apartheid and not even that hesacrificed personally for his nation's cause. It is thathe rose above the feelings of hatred against thoseresponsible for the oppression of the black majority.He was a great unifier for his countrymen preachingand practising reconciliation and peace. You needextraordinary faculties to pardon those whom you haveevery reason to hate. Therein lies the greatness ofthat man called Nelson Mandela. They don't makepeople like him anymore. May his soul rest in peace.

Thank you.

Venkat R. Venkitachalam

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CUSTOMSNOTIFICATIONS

Tariff• No new notifications!!

Non-Tariff• Retrospective amendment has been made of

exempting the additional duty of customs whichought to have been paid on Jute products fallingunder headings 5310 and 6305imported fromBangladesh during the period commencing onthe 9th day of July, 2004 and ending with the13th day of February, 2011.[Notification No.113/2013 - Customs (N.T.) dated 27/11/2013]

• Tariff value has been revised of Crude Palm Oil,RBD Palm Oil, Others - Palm Oil, CrudePalmolein, RBD Palmolein, Others - Palmolein,Crude Soyabean Oil, Brass Scrap (all grades),Poppy seeds, Gold, in any form and Silver, inany form. [116/2013-Cus(NT),dated 29/11/2013, Notification No. 110/2013-Customs (N.T.) dated 14/11/2013, Notification No. 110/2013-Customs (N. T.) dated 12/11/2013]

• Teetwal- Nauseri, Kupwara district of J & K isappointed as land customs station for thepurpose of clearance of baggage. [NotificationNo. 108 /2013-Customs (NT) dated 01Nov.2013]

Safeguard• No new notifications!!

Antidumping Duty• Anti-dumping duty on Diclofenac Sodium, falling

under heading 2942, originating in, or exportedfrom, People's Republic of China is extended fora period of one year valid uptoupto and inclusive

of 9th April, 2014.[Notification No.31/2013 -Cus (ADD), dt 13/11/2013]

• Imposition of definitive anti-dumping dutyextended on imports of 'Vitamin A Palmitate',originating in, or exported from, Switzerland andPeople's Republic of China for a further periodof five years and duty shall be paid in IndianCurrency only. [Notification No.30/2013 - Cus(ADD), dt 13/11/2013]

• Anti-dumping duty on Phenol, falling underchapter 27 or 29, originating in, or exported from,South Africa is extended for a period of one yeari.e. upto and inclusive of 30th October, 2014.[Notification No.29/2013 - Cus (ADD), dt 12/11/2013]

• Anti-dumping duty on imports of Cable Ties,falling under sub-heading 3926 90, originatingin, or exported from, the People's Republic ofChina and Taiwan is extended for a period ofone year i.e. upto and inclusive of 30th October,2014. [Notification No.28/2013 - Cus (ADD),dt 12/11/2013]

• Anti-dumping duty on Acrylic Fibre, falling underchapter 55, originating in, or exported from,Korea RP and Thailand is extended for a periodof one year i.e. upto and inclusive of 19thOctober, 2014. [Notification No. 27/2013 - Cus(ADD), dt 07/11/2013]

Circulars• No separate registration / certificate will be

required for claiming exemption from SpecialAdditional Duty (SAD) to parts, components andaccessories etc. of Mobile Handsets. [CircularNo. 43/2013-Customs dated 08/11/2013]

Instructions• No new Instructions

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CENTRAL EXCISENotifications

Tariff• Rre-printing, re-labeling, re-packing or stickering,

though amounts to manufacture was exemptedfrom payment of excise duty & registration for30days if it pertains to scheduled formulationsas defined under the Drugs Price Control Order(DPCO), 2013 for the products which are alreadyproduced, which is now extended to ninety days.[Notification No.22 /2013-CE (Tariff) dated29/11/2013]

Non-Tariff• Payment of duty electronically has been now

made mandatory for payment to be made morethat rupees one lakh which was earlier rupeesten lakhs.[Notification15/2013-CE (Non-tariff)dated 22/11/2013]

• Now even when whole or part of the excisablegoods are sold to/through related/inter-connected undertakings & used for captiveconsumption, valuation rule 8,9 & 10 ofCENTRAL EXCISE(DETERMINATION OFPRICE OF EXCISABLE GOODS) RULES, 2000will be applicable as the case may be.[Notification14/2013-CE (Non-tariff) dated 22/11/2013] please read detailed Article on thissubject in this issue.

Circular• The amendment made in rule 8,9,10 of CENTRAL

EXCISE (DETERMINATION OF PRICE OFEXCISABLE GOODS) RULES, 2000, which isexplained as under:

if an assessee clears his goods in such a waythat first removal of goods is to an independentbuyers, some goods are captively consumed,second removal is to such a related person whois covered under rule 9 and third removal is to aperson who is covered under rule 10, then thefirst removal should assessed under section4(1)(a), captively consumed goods should be

assessed under rule 8, second removal shouldbe assessed under rule 9 and third removalshould be assessed under rule 10 of these rules.It may be noted that Central Excise Valuation(Determination of Price of Excisable Goods)Rules, 2000 are not required to be followedsequentially. Each of these rules provide forarriving at the assessable value of goods underdifferent contingencies as noted by Hon'bleSupreme Court at paragraph 70 in case ofCommissioner of Central Excise, Mumbai vs M/s FIAT India Pvt Ltd [2012 (283) ELT 161 or2012-TIOL-58-SC-CX]. [Circular No. 975/09/2013-CX dated 25/11/2013]

Please read detailed Article on this subject in thisissue.

SERVICE TAXNotifications• Payment of service tax electronically has been

now made mandatory for payment to be mademore than rupees one lakhs which was earlierrupees ten lakhs [Notification No.16/2013dated 22/11/2013]

• Time limit for submission of Form A-3 by the SEZUnit or the Developer have been specified as30th of the month following the quarter forfurnishing the details of specified servicesreceived by it without payment of service tax.However for the quarter July to September2013 the date has been extended to 15th ofDecember 13.[Notification No. 15/2013 dated21/11/2013]

Circulars• In the recently held interactive sessions

at Chennai, Delhi and Mumbai, which werechaired by the Hon'ble Finance Minister, thetrade had raised certain queries and alsoexpressed some apprehensions. Hence certainissues raised in these interactive sessions, whichhave not been specifically clarified hitherto orclarified a dequately, are discussed andclarifiedas under:

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S.No. Issue raised Clarification

1 An instance was brought to notice wherein adeclaration was returned probably on the groundthat it was incomplete.

As has already been directed by the Board, vide the saidletter dated 22.8.2013 (para 2.4 of the letter), the designatedauthority shall ensure that no declaration is returned. In allcases, declaration should be promptly received and dulyacknowledged. Request for clarification should be dealt withpromptly. Defects in the application, if any, should beexplained to the declarant and possible assistance be providedin rectifying these defects. The effort must be to accept adeclaration, as far as possible, and recover the arrears oftax.

2 An apprehension was raised that declarationsare being considered for rejection under section106 (2) of the Finance Act, 2013, even thoughthe "tax dues" pertain to an issue or a periodwhich is different from the issue or the periodfor which inquiry /investigation or audit waspending as on 1.3.2013.

Section 106(2) prescribes four conditions that would lead torejection of declaration, namely,(a) an inquiry or investigation in respect of a service tax not

levied or not paid or short-levied or short-paid has beeninitiated by way of,-(i) search of premises under section 82 of the Finance

Act,1994 ; or(ii) issuance of summons under section 14 of the Central

Excise Act, 1944; or(iii) requiring production of accounts, documents or other

evidence under the Finance Act, 1994 or the rulesmade there under; or

(b) an audit has been initiated, and such inquiry, investigationor audit was pending as on the 1st day of March, 2013.

These conditions may be construed strictly and narrowly.The concerned Commissioner may ensure that no declarationis rejected on frivolous grounds or by taking a widerinterpretation of the conditions enumerated in section 106(2).If the issue or the period of inquiry, investigation or audit isidentifiable from summons or any other document, thedeclaration in respect of such period or issue alone will beliable for rejection under the said provision.Examples:(1) If an inquiry, investigation or audit, pending as on 1.3.2013

was being carried out for the period from 2008-2011,benefit of VCES would be eligible in respect of 'tax dues'for the year 2012, i.e., period not covered by the inquiry,investigation or audit.

(2) If an inquiry or investigation, pending as on 1.3.2013 wasin respect of a specific issue, say renting of immovableproperty, benefit of VCES would be eligible in respect of'tax dues' concerning any other issue in respect of whichno inquiry or investigation was pending as on 1.3.2013.

It is also reiterated that the designated authority, if he hasreasons to believe that the declaration is covered by section106(2), shall give a notice of intention to reject the declarationwithin 30 days of the date of filing of the declaration statingsuch reasons to reject the declaration. Commissioners shouldensure that this time line is followed scrupulously.

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S.No. Issue raised Clarification

3 Whether benefit of VCES would be available incases where documents like balance sheet,profit and loss account etc. are called for bydepartment in the inquiries of roving nature,while quoting authority of section 14 of theCentral Excise Act in a routine manner.

The designated authority/ Commissioner concerned may takea view on merit, taking into account the facts andcircumstances of each case as to whether the inquiry is ofroving nature or whether the provisions of section 106 (2) areattracted in such cases.

4 Whether the benefit of the Scheme shall beadmissible in respect of any amount coveredunder the definition of 'taxes dues', as definedin the Scheme, if paid by an assesses after thedate of the Scheme coming into effect, (i.e.,10.5.2013), but before a declaration is filed

Yes, benefit of the Scheme would be available if such amountis declared under the Scheme subsequently, along with theremaining tax dues, if any, provided that Cenvat credit hasnot been utilized for payment of such amount.Example:A person has tax dues of Rs 10 lakh. He makes a paymentof Rs 2 lakh on 15.5.2013, without making a declaration underVCES. He does not utilize Cenvat credit for paying thisamount. Subsequently, he makes declaration under VCESon 1.7.2013. He may declare his tax dues as Rs 10 lakh. Rs2 lakh paid before making the declaration will be consideredas payment under VCES.

5 Whether declaration can be made in such casewhere service tax pertaining to the periodcovered by the Scheme along with interest hasalready been paid by the parties, before theScheme came into effect, so as to get waiverfrom penalty and other proceedings?

As no "tax dues" is pending in such case, declaration cannotbe filed under VCES. However, there may be a case for takinga lenient view on the issue of penalties under the provision ofthe Finance Act, 1994. In this regard attention is invited tosection 73 (3) and section 80 of the Finance Act, 1994.

[Circular No.174/9/2013 - ST dated 25/11/2013]

FOREIGN TRADE POLICYNotifications• Export of specified narcotics drugs and

psychotropic substances under Chapter 29Organic Chemicals shall be permitted subject toNOC from Narcotics Commissioner of India,Gwalior. [Notification No 55 (RE - 2013)/2009-2014dated 3/12/2013]

• Description "Value added products of RedSanders wood" against item Sl. No. 189 ofSchedule 2 of ITC(HS) Classification of Export &Import Item has been amended. [NotificationNo. 54 (RE- 2013 )/2009-2014 dated 3/12/2013]

• The minimum price for import (ie CIF value) ofCashew Kernel (brokens) and Cashew Kernel(wholes) is fixed to Rs. 288/-per Kg. andRs. 400/-per Kg. Respectively. [NotificationNo.53 (RE - 2013)/2009-2014 dated 2/12/2013]

• Human Embryo is classified under ITC (HS)Code 0511 99 99 of Chapter 5 of ITC (HS) 2012,Schedule 1 (Import Policy). Import of HumanEmbryo will be 'free' subject to a 'No ObjectionCertificate' from Indian Council of MedicalResearch (ICMR). [Notification No.52 (RE -2013)/2009-2014 dated 2/12/2013]

• Certain items which are prohibited for export maybe allowed for export under advanceauthorization scheme, subject to stipulatedconditions. In respect of an EOU, permission toexport a prohibited item may be considered, byBOA, provided such raw materials are importedand there is no procurement of such raw materialfrom DTA. [Notification No.51 (RE - 2013)/2009-2014 dated 14/11/2013]

• Export of Kerosene and LPG to Nepal & Bhutanby Indian Oil Corporation has been exemptedfrom the requirement of NOC from Ministry of

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Petroleum & Natural Gas. [Notification No 50(RE - 2013)/2009-2014 dated 11/11/2013]

Public Notice• Procedure for export of 1998.5917 MTs of value

added products of Red Sanders wood byGovernment of Andhra Pradesh has beennotified. [Public Notice No. 42 (RE-2013)/2009-2014 dated 3/12/2013]

• Under SION A-315, quantity of import item BetaPicoline has been reduced from 1.2 Kg to 0.9 Kgfor every Kg of this export product. [PublicNotice No. 41 (RE: 2013) /2009-2014 dated2/12/2013]

• Under SION A-2439, quantity of import item BetaPicoline has been reduced from 1.21 Kg to 1.05Kg for every Kg of export product. [Public NoticeNo. 40 (RE: 2013)/2009-2014 dated 2/12/2013]

• One new Pre Shipment Inspection Agency (PSIA)has been added as Sl.No.39 in the Appendix-5of the Handbook of Procedures.

Name of the Global Consortium for InterInspection Agency Border Trade Inspection and

Certification Ltd.

Head Office United Kingdom

Branch Office North America

South America

UAE

Singapore

[Public Notice No. 39/(RE:2013)/2009-2014dated 26/11/2013]

• Export of finished leather, Wet Blue and EITanned leather has been permitted through theICDs/CFSs at Chennai, Mumbai & Kolkata also.[Public Notice No. 38 (RE-2013) / 2009-14dated 20/11/2013]

• Items which are otherwise prohibited for exportsbut which have been permitted for export underthe advance authorization scheme have beenspecified along with conditions applicable forsuch exports. [Public Notice No.37 /2009-2014(RE- 2013) dated 14/11/2013]

• Allocation of 10,000 MTs of white sugar for the

year 2013-14 (October, 2013- September, 2014)for export to EU under CXL Quota. [PublicNotice No. 36 (RE-2013)/2009-2014 dated11/11/2013]

Policy Circular• Enhancement in registered quantity for export

of sugar to 50,000 Mts instead of 25,000Mts.[Policy Circular No. 10 (RE-2013)/2009-14dated 12/11/2013]

MVATNOTIFICATIONS• No New Notifications.

Circulars• Set off can be claimed by the Developer for

development of processing area in the SEZ inaccordance with Rule 55B read with 57 (g) &(h)and set off cannot be claimed by the co-Developer. [Circular No. 8T of 2013 dated29/11/2013]

• Procedure enunciated for rectification of themistakes while making e-payment has beenmodified. [Circular No. 7T of 2013 dated21/11/2013]

INCOME TAXNOTIFICATION• Multi Commodity Exchange of India Limited,

Mumbai is notified by the Central Governmentas recognized Stock Exchange for eligibletransaction in respect of trading in commodityderivatives not being termed as speculativetransaction. [Notification No. 92/2013 dated29/11/2013]

• Universal Commodities Exchange Limited,Mumbai is notified by the Central Governmentas recognized Stock Exchange for eligibletransaction in respect of trading in commodityderivatives not being termed as speculativetransaction. [Notification No. 91/2013 dated27/11/2013]

• National Commodities and Derivatives ExchangeLimited, Mumbai is notified by the Central

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Government as recognized Stock Exchange foreligible transaction in respect of trading incommodity derivatives not being termed asspeculative transaction. [Notification No.90/2013 dated 27/11/2013]

• Archery Association of India has been notifiedfor the purpose of 80G i.,e. Donation benefit forthe A.Y. 2013-14, 2014-15, 2015-16.[Notification No. 88/2013 dated 06/11/2013]

• Amount received in the form of grant-in-aid fromthe Central Government by the Tripura State AidsControl Society is exempted from the IncomeTax. [Notification No.87/2013 dated06/11/2013]

• Cyprus has been specified as the Notifiedjurisdictional area in terms of Section 94A forspecial measures to be adopted for transactionswith persons located therein. [Notification No.86/2013 dated 01/11/2013]

Circular• Section 144C requiring the AO to send the

proposed order of assessment having anyvariation in the income or loss returned which isprejudicial to the interest of the assessee witheffect from 1st of October 2009. [Circular No.9/2013 dated 19/11/2013]

SEZ• Time limit for submission of Form A-3 by the SEZ

Unit or the Developer have been specified as30th of the month following the quarter forfurnishing the details of specified servicesreceived by it without payment of service tax.However for the quarter July to September 2013the date has been extended to 15th of December13. [Notification No. 15/2013 dated21/11/2013]

• Set off can be claimed by the Developer fordevelopment of processing area in the SEZ inaccordance with Rule 55B read with 57 (g) &(h)and set off cannot be claimed by the co-Developer. [Circular No. 8T of 2013 dated 29/11/2013]

Company LawNotification• No New Notifications.

Circular• "Section 372A of the Companies Act, 1956

dealing with inter-corporate loans continue toremain in force till section 186, of the CompaniesAct, 2013 is notified." [General Circular No.18/2013 dated 19/11/2013]

Circular Number Date ofIssue Department Subject Meant for

RBI Circulars November - 2013

RBI/2013-2014/388DBOD. No.Dir.BC.

73/13.03.00/2013-14

29.11.2013 Department ofBanking

Operations andDevelopment

Interest Rates on FCNR (B)Deposits

All Scheduled Commer-cial Banks (ExcludingRRBs)

FEMA / RBI

RBI/2013-2014/377A.P.(DIR Series)Circular No. 77

22.11.2013 Foreign ExchangeDepartment

Overseas Foreign CurrencyBorrowings by AuthorisedDealer Banks

All Category - IAuthorised DealerBanks

RBI/2013-2014/375A.P. (DIR Series)

Circular No.76


Deferred Payment Protocolsdated April 30, 1981 and De-cember 23, 1985 between Gov-ernment of India and erstwhileUSSR

All Category - IAuthorised DealerBanks

1 0


Circular Number Date ofIssue Department Subject Meant for

RBI/2013-2014/368A. P. (DIR Series)

Circular No.74


Foreign investment in India -participation by SEBI regis-tered FIIs, QFIs and SEBI reg-istered long term investors incredit enhanced bonds

All Category-IAuthorised DealerBanks

RBI/2013-2014/367A. P.(DIR Series)

Circular No. 73


Import of Gold by NominatedBanks /Agencies/Entities

All Scheduled Commer-cial Banks which areAuthorised Dealers(ADs) in Foreign Ex-change/ All Agenciesnominated for import ofgold


Circular No. 72


Foreign Direct Investment inFinancial Sector - Transfer ofShares

All Category-IAuthorised dealer Banks


Circular No. 71


Advance Remittance for Importof Rough Diamonds


RBI/2013-2014/364A. P. (DIR Series)

Circular No.70


Third party payments for export/ import transactions




Amendment to the "Issue ofForeign Currency ConvertibleBonds and Ordinary shares(Through Depository ReceiptMechanism) Scheme, 1993"

All Category - IAuthorised dealer Banks



Foreign Direct Investment(FDI) in India -definition of'group company'




Trade Credit for imports intoIndia- Online submission ofdata on issuance of Guarantee/Letter of Undertaking (LoU)/Letter of Comfort (LoC) by ADs


1 1


CBEC Notified Exchange Rate for Conversion of Foreign Currency w. e. f.6th Dec 2013 (Notification No. 117/2013 Cus (NT) dtd. 5th Dec 2013)

SCHEDULE - I

S.No. Foreign Currency

Rate of exchange of one unit of foreign currencyequivalent to Indian rupees

(For Imported Goods) (For Export Goods)

1. Australian Dollar 56.50 55.15

2. Bahrain Dinar 168.60 159.35

3. Canadian Dollar 58.60 57.15

4. Danish Kroner 11.45 11.10

5. EURO 84.85 82.90

6. Hong Kong Dollar 8.05 7.90

7. Kuwait Dinar 224.55 212.05

8. New Zealand Dollar 51.40 50.10

9. Norwegian Kroner 10.20 9.90

10. Pound Sterling 102.30 100.05

11. Singapore Dollar 49.80 48.65

12. South African Rand 6.10 5.75

13. Saudi Arabian Riyal 16.95 16.00

14. Swedish Kroner 9.65 9.35

15. Swiss Franc 69.40 67.55

16. UAE Dirham 17.30 16.35

17. US Dollar 62.30 61.30

S.No. Foreign Currency

Rate of exchange of 100 units of foreign currencyequivalent to Indian rupees

SCHEDULE-II

(For Imported Goods) (For Export Goods)

1. Japanese Yen 61.10 59.65

2. Kenya Shilling 73.45 69.20

1 2


IMPACT OF CHANGES IN VALUATIONRULES UNDER CENTRAL EXCISE

By CMA Ashok B. Nawal

Notification 14/2013 CE (NT) dtd. 22.11.2013 wasissued for removing no of controversies on accountof valuation of goods captively consumed and alsofor partly sold to unrelated buyer.

Section 4 of Central Excise Act 1944 deals with theprovisions related to valuation of excisable goods forthe purposes of charging of the duty of excise. Inaccordance with sub section (a) of the said section,in case where goods are sold by the assessed, fordelivery at the time and place of removal, the assesseand the buyer of the goods are not related and theprice is the sole consideration for the same, be thetransaction value.

In accordance with sub section (b) of the said section,in other cases, including the case where the goodsare not should be the value determine in such manneras may be prescribed.

In other words whenever goods are sold to un-relatedbuyer, transaction value will be the assessable valueand Valuation Rules only to be adopted when goodsare not sold to unrelated buyer.

Rule (4) of Valuation Rules deals with only to the extentof adjustment on account of difference in date ofdelivery.

Rule (5) deals in the circumstances where goods aresold except in the circumstances where adjustmentof transportation required to be made. In other wordswhen goods are sold other than place of removal, inthat case only, Rule (5) will be applicable subject toadjustment of transportation cost.

Rule (6) is applicable, when sale is made at the pricewhich is not the sole consideration but value of freegoods and services has to be loaded to determineassessable value.

Rule (7) deals with the circumstances of stock transferto depot, consignment agent, etc. etc.

Rule (8) deals with the situation, where goods arecaptively consumed

Rule (9) deals with the situation, when 100% goods

are sold only to related buyers.

Rule (10) deals with the situation when 100% goodsare sold to interconnect undertaking.

Rule(10A) deals with the situation when goods aremanufactured by the job worker and sold by theprinciple manufacturer from the factory of job worker.

Rule (11) deals with the situation when the valuecannot be determine in accordance with Rule (1) to(10) and sub section 1 and 4 of Central Excise Act1944.

As a matter of fact,there should have not been anyconfusion, since rules are very clear. Though, BoardCircular No. 643/34/2002-CX.1st July, 2002alsodo notcreate confusion, some of the juridical decisions werecontradictory to each other.

Larger Bench in the case of ISPAT INDUSTRIESLTD.Vs.COMMISSIONER OF C. EX., RAIGAD2007(209) E.L.T. 185 (Tri. - LB)has held that sequentialapplication of various rules will be only reasonable toread the rules and therefore held that, if some goodsare sold to independent buyers and some of themare used for captive consumption then valuation forcaptive consumption should be at the price wheregoods sold to independent buyer. Since, applicationof Rule 4 ibid will lead to a determination of a valuewhich will be more consistent and in accordance withparent statutory provisions of Section 4 of CentralExcise Act, 1944.

The said ratio has been applied in case ofULTRATECH CEMENT Vs.COMMISSIONER OF C.EX., BHAVNAGAR2013 (295) E.L.T. 470 (Tri. -Ahmd.).

However, there were other decisions where Hon'bleTribunal has held in the case of Avon Tubes Ltd. 2004(117) ECR 616 Tri Delhi, that when goods are sold toindependent buyer the transaction value will beapplicable and the same goods are also used forcaptive consumption, assessable value will be 110 %of cost of product.

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Hon'ble Supreme Court has held in the case ofCOMMISSIONER OF CENTRAL EXCISE, MUMBAIVs. M/s FIAT INDIA PVT LTD & ANR 2012-TIOL-58-SC-CX

Quote : Para 70 :"Rule 2 of the 1975 Valuation Rules provides fordefinition of certain terms, such as "proper officer","value" etc., Rule 3 of the above Rules, provides thatthe value of any excisable goods, for the purposes ofClause (b) of Sub-Section (1) of Section 4 of the Actbe determined in accordance with these Rules. Rule4 provides that the value of the excisable goods shallbe based on the value of such goods by the assesseefor delivery at any other time nearest to the time ofremoval of goods under assessment. Rule 5 providesthat when the goods are sold in the circumstancesspecified in Clause (a) of Sub-Section (1) of Section(4) of the Act except that the price is not the soleconsideration, the value of such goods shall be basedon the aggregate price and the amount of the moneyvalue of any additionalconsideration flowing directlyor indirectly from the buyer to the assessee. Rule 6provides, that, if the value of the excisable goodsunder assessment cannot be made, then to invokeprovisions of Rule 6 of the Rules, wherein certainadjustments requires to be made as provided therein.Rule 7 is in the nature of residuary clause. It providesthat if the value of excisable goods cannot bedetermined under Rule 4, 5 and 6 of the Rules, theadjudging authority shall determine the value of suchgoods according to the best of his judgment and whiledoing so, he may have regard to any one or more

methods provided under the aforesaid Rules. A barereading of these rules does not give any indicationthat the adjudging authority while computing theassessable value of the excisable goods, he had tofollow the rules sequentially. The rules only providesfor arriving at the assessable value under differentcontingencies. Again, Rule 7 of the Valuation Ruleswhich provides for the best judgment assessmentgives an indication that the assessing authority whilequantifying the assessable value under the saidRules, may take the assistance of the methodsprovided under Rules 4, 5 or 6 of the Valuation Rules.Therefore, contention of the learned counsel that theassessing authority before invoking Rule 7 of the 1975Valuation Rules, ought to have invoked Rules 4, 5and 6 of the said Rules cannot be accepted. In ourview, since the assessing authority could not do thevaluation with the help of the other rules, has resortedto best judgment method and while doing so, hastaken the assistance of the report of the 'CostAccountant' who was asked to conduct special auditto ascertain the correct price that requires to beadopted during the relevant period. Therefore, wecannot take exception of the assessable value of theexcisable goods quantified by the assessing authority.

Unquote.In view of the same CBEC have issued the circularno. 975/09/2013-CX dtd.25th November, 2013 basedon the changes made through Notification No. 14/2012 CE NT dtd. 22 Nov 2013. I give below thecomparison of earlier rules and existing rules andimpact thereof.

Rule Prior to 22nd Nov 2013 After 22nd Nov 2013 Impact

8 Where the excisable goods are notsold by the assessee but are usedfor consumption by him or on hisbehalf in the production or manu-facture of other articles, the valueshall be one hundred and ten percent of the cost of production ormanufacture of such goods.

Where whole or part of the excis-able goods are not sold by the as-sessee but are used for consump-tion by him or on his behalf in theproduction or manufacture of otherarticles, the value of such goodsthat are consumed shall be onehundred and ten per cent of thecost of production or manufactureof such goods."

If the goods are sold to indepen-dent buyer then transaction valuewill be assessable value and thesame have been used for captiveconsumption even at the same timeand place of removal, assessablevalue will be 110% of cost of prod-uct to be determined in terms ofCost Accounting Standard No. 4and to be certified by practicingCost Accountant

9 When the assessee so arrangesthat the excisable goods are notsold by an assessee except to orthrough a person who is related inthe manner specified in either of

Where whole or part of the excis-able goods are sold by the asses-see to or through a person who isrelated in the manner specified inany of the sub-clauses (ii), (iii) or

If goods are sold to related buyerand such related buyer uses thesame for own captive consumption,then the assessable value will be110% of cost of product to be

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Rule Prior to 22nd Nov 2013 After 22nd Nov 2013 Impact

sub-clauses (ii), (iii) or (iv) of clause(b) of sub-section (3) of section 4of the Act, the value of the goodsshall be the normal transactionvalue at which these are sold bythe related person at the time ofremoval, to buyers (not being re-lated person); or where such goodsare not sold to such buyers, to buy-ers (being related person), who sellssuch goods in retail:Provided that in a case where therelated person does not sell thegoods but uses or consumes suchgoods in the production or manu-facture of articles, the value shallbe determined in the manner speci-fied in rule 8.

(iv) of clause (b) of sub-section (3)of section 4 of the Act, the valueof such goods shall be the normaltransaction value at which theseare sold by the related person atthe time of removal, to buyers (notbeing related person); or wheresuch goods are not sold to suchbuyers, to buyers (being relatedperson), who sells such goods inretail :Provided that in a case where therelated person does not sell thegoods but uses or consumes suchgoods in the production or manu-facture of articles, the value shallbe determined in the manner speci-fied in rule 8.

determined in terms of Cost Ac-counting Standard No. 4 and to becertified by practicing Cost Accoun-tant but if such goods are sold byrelated buyers. However whengoods are sold to related party andin turn related party sales to theunrelated buyer then assessablevalue will be the price of the goods,which are sold to the unrelatedbuyer.

10 When the assessee so arrangesthat the excisable goods are notsold by him except to or throughan inter-connected undertaking, thevalue of goods shall be determinedin the following manner, namely :-(a) If the undertakings are so con-nected that they are also related interms of sub-clause (ii) or (iii) or (iv)of clause (b) of sub-section (3) ofsection 4 of the Act or the buyer isa holding company or subsidiarycompany of the assessee, then thevalue shall be determined in themanner prescribed in rule 9.Explanation. - In this clause "hold-ing company" and "subsidiary com-pany" shall have the same mean-ings as in the Companies Act, 1956(1 of 1956).(b) in any other case, the valueshall be determined as if they arenot related persons for the purposeof sub-section (1) of section 4.

Where whole or part of the excis-able goods are sold by the asses-see to or through an inter-con-nected undertaking, the value ofsuch goods shall be determined inthe following manner, namely:(a) If the undertakings are so con-nected that they are also related interms of sub-clause (ii) or (iii) or (iv)of clause (b) of sub-section (3) ofsection 4 of the Act or the buyer isa holding company or subsidiarycompany of the assessee, then thevalue shall be determined in themanner prescribed in rule 9.Explanation. - In this clause "hold-ing company" and "subsidiary com-pany" shall have the same mean-ings as in the Companies Act, 1956(1 of 1956).(b) in any other case, the valueshall be determined as if they arenot related persons for the purposeof sub-section (1) of section 4.

Except re-wording of the phrasethere is no impact on account ofchanges.

published in the official gazette or specificallymentioned in the notification. Similarly the circular isof clarificatory nature and it is very clear that insequential rules are not required to be followed whiledetermining the assessable value and specific rulesare required to be followed unlike in CustomsValuation Rules.

To conclude, a company can sale the product to

independent buyer at transaction value and exciseduty is required to be paid on that, whereas if thesame goods are used for captive consumption or soldto related party for own consumption, then assessablevalue will have to be determined based on 110% ofcost of production value, based on the principles ofCost Accounting Standard No. 4 which is certified bypracticing Cost Accountants.

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The newly enacted Companies Act 2013 has anumber of provisions which will have implications onAudits and Auditors. A sea change is expected in therealm of audit relationships in companies. Let us seesome of the highlights of the Act which has a bearingon audit and auditors. The provisions relating to auditare contained in Sections 139 to 147, 132, 245, 447and 448 of the new Act.

1. Appointment of Auditors: The auditorsappointed in an AGM will hold office from theconclusion of that meeting till the conclusion ofthe ensuing sixth AGM. The Act, however, alsostipulates that the members shall ratify theirappointment in every AGM. This provision whileprotecting the tenure of the auditors to aminimum period of five years will also bring in anelement of stability to the audit scene. The auditoris eligible for re appointment only after the expiryof five years since completion of the previoustenure. The provisions for change of auditors arestringent requiring even the permission of theCentral Government. The Tribunal is investedwith the powers to change he auditor in case itfinds the auditor or the firm of auditors guilty offraudulent practices.

2. Rotation of Auditors: Mandatory rotation ofauditors in the case of listed and other prescribedcompanies should have beneficial effects. Therecould be some negative impact on account ofnon familiarity of a new client's business andaccounting practices. This may be a small priceto pay to prevent development of long termunholy and mutually beneficial cozy relationshipbetween the auditor and his client. Incidentallythere is a transitory period of three years afterthe enactment of the new Act for the companyto implement these provisions.

3. Auditor as a Whistle-blower: The auditor issought to be made a de facto whistle blower. Heis now duty bound to report to the Central

THE NEW COMPANY ACT 2013 - UPDATESBy Venkat R Venkitachalam

Company Secretary,

Article No. 4 – Audit and the Companies Act 2013

Government if an offence involving fraud isperceived to have been committed. This willensure that an auditor of the company is notmade a mute spectator to the goings-on in thecompany when some fraud is being perpetrated.Fraud as defined by the new Act has wideconnotations.

4. Limited Liability Partnerships: Anotherqualitative improvement concerning audit andaudit firms is that unlike in the previous Act thecompany can appoint a firm wherein a majorityof the partners are Chartered Accountants andeligible for appointment which shall also includeLimited Liability Partnerships. This is a welcomestep as it would bring in the much needed multidisciplinary overview of the operations of thecompany during audit. However, only CharteredAccountants are permitted to act and sign onbehalf of the audit firm.

5. Disqualifications of Auditors: Yet anothersalutary change provided in the new CompaniesAct is the additional disqualifications for beingappointed as an auditor. They include conditionslike having any business relationship with theclient company, the auditor's kin being part ofkey managerial personnel of the company, aperson convicted for fraud, a person in full timeemployment elsewhere, etc. Thesedisqualifications appear to be fundamental innature and can be expected in the cotemporarybusiness world though there are issues whichmay come up for debate and discussions withregard to some of the disqualifications.

6. Cap on Number of Audits: Unlike in theprevious version of the Companies Act, the newlegislation puts a blanket cap of 20 companiesfor an auditor. There are no provisions basedon the size and nature of the business and thislimit would also include private limitedcompanies. One can expect qualitative

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improvements in the audit conducted if theseprovisions are followed in letter and spirit.

7. National Financial Reporting Authority: Oneof the most significant provisions in the arena ofaccounts and audit of companies as per the newAct is the constitution of the National FinancialReporting Authority (NFRA). This Authority wouldreplace the existing National Advisory Committeeon Accounting Standards. NFRA will makerecommendations to the Central Government inlaying down auditing and accounting standardsas applicable to companies. This body will alsomonitor compliance with auditing and accountingstandards. NFRA is also charged with theresponsibility of imposing suitable penalties forprofessional or other misconducts by theauditors.

8. Penalties and Prosecutions: The new Actprescribes stringent and severe penaltiesbesides prosecution of auditors found guilty ofdereliction of duty, being a party to a fraud onthe company and the like. Besides refunding thefees collected, the auditors under suchcircumstances will be called upon to pay damagesand fine. This is in addition to the auditor beingprosecuted where the he is guilty of deceivingpurposefully, making misleading statements,issuing improper certifications, etc. Theoccupational hazard for the auditor appears tobe disproportionate in this case as he is madeliable to every person who is affected. In alitigious environment like ours auditors could bea new lucrative class of clients for the lawyers.

9. Class Action Suits against Auditors: The newprovision in the new Act enabling class actionssuits would enable minority shareholders toproceed against the company management andthe auditor in the National Company Law Tribunalclaiming damages and compensation if the

company is managed in a manner prejudicial tothe interest of the company. This is yet anotherproverbial Damocles Sword over the head of theauditor.

10. Reporting on Audit: The Companies Act 2013mandates that the auditor shall report both onthe adequacy of internal financial controls andtheir effectiveness in the organisation. Thisprovision expands the role of the auditor fromjust looking at the books of accounts tooperational areas to some extent in line with thebest practices around the world. The auditor willhave to make himself competent enough to liveup to such requirements.

11. Restricted Services: The practice of an auditorwith a boutique of services is now truly over. Thenew Act makes it amply clear that the auditorshall not undertake certain allied services likewriting of books, internal audit of the samecompany, etc. Till this day these were governedby the Code of Ethics of the Institute of CharteredAccountants of India.

It may not be difficult to fathom the rationale behindmany of the above provisions. Firstly the basicessence of the new Act is to make all professionalsassociated with the company from being justcompliance oriented to governance oriented. Many aprovision concerning the auditors in the new legislationcan be traced to what had been happening in thecorporate sector in the recent past where the auditorstogether with the company management had beenheld culpable and accountable. Barring some partsof the legislation which may need better clarity andcorrections one hopes that the profession of auditorsdischarges its responsibility which the society expectsof them.

Thank you

Venkat R. VenkitachalamCompany Secretary

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CENTRAL EXCISE:v Penalty not applicable when Registration

certificate not produced in time due to delayby Ministry of Environment : Assessee appliedfor registration certificate under Rule 6(ii) ofBatteries Rules, 2001. with in time however samenot produced due to delay by Ministry henceneither penalty nor batteries liable to confiscation.[2013(297)E.L.T. 571 (Tri.- Chennai )]

v Remission of Excise duty due to heavy rainsand flooding : Goods got destroyed due tofungus contamination with due information todepartment and in presence of representativeof Foods and drugs Authorities. Hence dueweight-age should be given to certificate issuedby Food and drugs Authorities who are also stategovernment officials. Rejection of remissionapplication not in consonance with law.[2013(297)E.L.T.540 (Tri. Ahmedabad)]

v Export of Goods under bond no time limitfor submission of proof of export : NotificationNo. 45/2001-C.E. Require to export goods withinsix month from date of which goods cleared fromfactory or warehouse etc. but no time limit for toproduce such document to authorities.[2013(297) E.L.T. 490 (Gujrat)]

v Demand of duty from co-notice : Whenproceeding against manufacturer standconcluded, proceeding against co-notice underRule 26 of Central excise Rules,2002.renderword "Other person" in said first provisoredundant resulting in unnecessary litigation.

v For rejecting declared value, manufacturing costand price of raw material of country in whichgoods manufactured to be considered and notraw material prices of similar goods in India.[2013 (297) E.L.T. 49 (Tri.Del.)]

v Appeal involving less than Rs.5 lacs notmaintainable at CESTAT- Section 35B of CentralExcise Act,1944. [2013 (297) E.L.T. 91 (Tri.-

Chennai)]v Area based exemption given for industrial units

situated in North-East area to Lamitubes usedin packaging of goods, namely cosmetics underNotification No. 32/99- C.E. is meant forencouraging industrial growth as well asexpansion of existing industrial units in North-Eastern Sector. [2013 (297) E.L.T. 117(Tri.Kolkata)].

v Cenvat credit claimed after 6 months duringtransactional period not deniable by assessingofficer. [2013 (297) E.L.T. 35 (M.P)].

v Seized documents to be returned to assesseeto enable him to frame proper reply to SCN inhis defense. [2013 (297) E.L.T. 55 (Tri.-Del.)].

v Compensation given to buyers for goodsdamaged subsequent to clearance, Prima facie,it cannot result in lowering of assessable value.2013. [(297) E.L.T. 94 (Tri.-Del.)].

v Pre-deposit: Capacity of party to pay has to benoticed. It is based on undue hardship, primafacie case, balance of convenience, financialburden & other difficulties expressed [2013(296)ELT 145(Mad.)]

v Tax collected but not paid to Government -No extended period: Amount collected byperiod as a tax but not deposited withGovernment. No demand can be made after 5years invoking section 11D. Machinery provisionof section 11D of Central Excise Act could beinvoked in aid of main provision. i. section 11Abut not vice versa. [2013(296) ELT 164(All)]

v Settlement Commission not competent toadjudge legality of adjudication order. Itcannot go into fact whether hearing was grantedbefore adjudicating Order was passed[2013(296) ELT 158(Cal)]

v SSI Exemption - Deemed Export: "deemedexports" are not "Exports" hence their value hasto be included in value of clearance under SSI

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exemption. [2013(296) ELT 215(Tri-Chennai)]v Refund: Bar of unjust enrichment not applicable

when amount deposited during investigationunder instructions from Department. [2013(296)ELT 204(Tri-Mumbai)]

v Delay in Refunds: refund of duty to units underarea based exemption has to be paid as perschedule; in case of delay refund has to be madeon provisional basis. [2013(296) ELT13(Gau.)]Review of own Order: once Tribunalpassed an order, whether interim or final, itbecomes functus officio and has no power ofreview. [2013(296) ELT 71(Tri-Del.)]

v Redemption fine cannot reduce by theCESTAT without recording any reason:Hon'ble Tribunal while passing the order notconsidered the findings recorded by theAdjudicating Authority in his Order and alsoignored the statement of the assesee merely onthe ground that their Statement cannot beaccepted in the absence of corroboration by anyindependent evidence. Tribunal is expected togive reasons in support of its Order and merelystating "Keeping in view facts and circumstancesof case" does not satisfy requirement of speakingOrder. Matter remanded for fresh considerationand for passing order with reason. [2013(296)E.L.T.329(Bom.)]

v Contradiction in CESTAT Order as to thepleading of Financial Hardships: Assesseehas claimed that "reclaimed waste oil" shall benon- excisable as process not amounting tomanufacture as per decision in the case ofMineral Oil Corporation(1999(114) E.L.T.166(Tribunal). But this decision of Mineral Oil haslost its precedent value in wake of interim Orderof High Court in appeal filed in case of CCE JEELubricants [2010(251)EL.T.439 (Tri. Bang.) andalso direction has been given by the Hon'ble HighCourt not to dispose of cases following decisionof Mineral Oil. Assessee has not taken the pleaof the financial hardships in the stay applicationand there is also no pleading of limitation againstdemands, hence, Assessee cannot claim fullwaiver of the pre-deposit. [2013(296) E.L.T.409(Tri.Bang.)]

v Interest not demandable when suppression,fraud and mis-declaration not proved:

Assessee was paying the differential duty fromtime to time and showing particulars of the samein their monthly returns filed by them andtherefore extended period cannot be invoked.Hon'ble Tribunal in the case of Ucal Fuel SystemsLtd. Vs. CCE, Chennai 2010(261)E.L.T.375(Tri.Chennai) held that for demandinginterest, limitation under Section 11A of theCentral Excise Act, 1944 will be applicable and ifthe Suppression, fraud, mis-declaration are notproved, interest cannot be demanded.[2013(296)E.L.T.342(Tri.Bang.)]

v Option for payment of 25% penalty underSection 11AC of the Central excise Act, 1944can be granted at Appellate stage: Assesseeis required to be given option by adjudicatingauthority where he is asked to pay a duty demandwith interest and 25% of penalty within 30 daysfrom the date of adjudication of order. Wheneversuch option is not given earlier and matter isremanded back, 30 days period is consideredfrom date of availing such option.[2013(296)E.L.T.327(Guj.)]

v Amount deposited twice over for samegoods not a payment of Excise duty andhence to be returned and section 11B of theCentral Excise Act, 1944 will not beapplicable: Second/Double deposit of dutyamount on the clearances of goods did notamount to deposit of Excise Duty and revenuecannot retain or withhold. Merely because thereis no specific statutory provision pertaining toreturn of amount deposited under mistake, toretain such amount would be inequitable. Suchclaim also would not be fall within Section 11B ofthe Central Excise Act, 1944. [2013(296)E.L.T.321(Guj.)]

v Cenvat credit not eligible on the strength ofthe Xerox copies of Bill of Entry: Cenvat credithas been availed on the basis of Xerox copies ofBill of Entries claiming that Original copies lost inthe fire. Neither efforts has been made by theassessee for acquiring necessary certificatesfrom jurisdictional Officer regarding duty payingnature of inputs nor copy of FIR mention of lossof concerned documents. Rule 9(1) prescribesthat Cenvat credit available only against originalcopy of documents. Cenvat credit denied.[2013(296)E.L.T.(365)(Tri.Ahmd.)]

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v Duty liability under Rule 6(3)(b) of the CenvatCredit Rules, 2004 arises only when exemptedproducts are not in the nature of By-Product/waste/residue: Assessee has used somecommon inputs in the manufacture of dutiableand exempted goods. They have cleareddutiable main products on payment of dutywhereas two By-products has been cleared atNil rate of duty as said products are exemptedfrom payment of duty in terms of Notification No.3/2006-CE dt.01.03.06. After consideringdecision of Hon'ble Bombay High Court asreported in 2009(233)E.L.T.301(Bom.) holdingthat where common inputs are used in themanufacture of dutiable and exempted product,liability to pay amount under erstwhile Rule 57CCof Central Excise Rules, 1944 arises only forproduct and not for waste/byproduct, Hon'bleBench has allowed the appeal. [2013(296)E.L.T.378(Tri.Ahmd.)]

v Interest on delayed refund of pre-deposit:Hon'ble Tribunal has passed the Order in favorof the Assessee then amount of pre-depositmust be returned within three months from dateof Order. As per CBEC Circular No. 802/35/2004-CX dated 08.12.2004, interest available ondelayed refund after three month from the dateof issue of Order. No requirement for filling anapplication for refund claim. [2013(296)E.L.T.337 (Tri.Mum)]

v RTI - Missing file or record to be investigated:Responsible must be fixed for loss of records offiles and to be investigated and disciplinary actionagainst erring officer to be taken [2013(297)E.L.T. 500 (Dehli High Court)]

v Sufficient cause for condonation of delay fillingappeal is condoned. Notice was sent at addressof office of company which was taken over bythe bank in the year 2006, hence he did not getthe order-in-original sent at address is sufficientcause. [2013 (297) E.L.T. 44 (P & H)].

v Consumer Protection- deficiency in service:Compensation by reference to value of goodslost or damaged can be claimed only if nature orvalue of such goods have been declared byshipper before shipment and inserted in Bill ofLading. [2013 (297) E.L.T 321 (S.C.)]

v General Manager of the company can beinferred to be in charge and responsible toaccused company for carrying on its day to daybusiness, is liable for offences committed byaccused company and absence of requisiteaverment complaints cannot lead to quashing ofcase against him. [2013 (297) E.L.T 349 (Cal.)]

v No imposition of penalty and interest on reversalof unutilized Cenvat credit wrongly availed by SSIunit as Cenvat Credit wrongly taken not utilizedand reversed immediately on pointing out of mis-take. [2013 (297) E.L.T 391 (Tri.-Del.)]

v Cess- Interest for delayed payment of cess notdemandable under provisions of Central ExciseAct and Rules made there under. [2013 (297)E.L.T 383 (Tri.-Ahmd.)]

CUSTOM:v Custom Valuation : of getting manufacture's

invoice is irrelevant -Imported can producecontemporaneous records certified by foreignsupplier to substantial value declared by themunder section 14 of Customs Act, 1962.[2013(297) E.L.T.504(Madrad)]

v Board should issue guidelines to the Customsauthority to properly deal with the smuggledgoods under law of customs without any lenientconsideration to safeguard the economy.[2013(297) E.L.T. 100 (Tri.Del.)]

v Interest chargeable when goods imported atconcessional duty diverted. Department relyingon Rule 8 of customs (Import of Goods atConcessional Rate of Duty for Manufacture ofExcisable Goods) Rules, 1996, which neitherincorporated Section 28AB of Customs Act, 1962nor made pre condition mentioned in that Sectionits part and parcel. [2013 (297) E.L.T.10 (Del.)]

v Contempt of Court: adjournments sought onthe ground of illness of Advocate when saidAdvocate already withdrawn Vakalatnama - casereferred to Bombay High Court for contemptproceedings. [2013(296) ELT 130(Tri-Mumbai)]

v Goods imported in pre-packaged form, no MRPsticker found, hence goods liable for confiscation& penalty as per section 111 and 112 of CustomAct, 1962. [2013 (297) E.L.T 389 (Tri.-Del.)]

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SERVICE TAX:v Free supplies of material by recipient of

service not includible in 'Taxable Value' orin 'Gross Amount Charged': Value of 'freesupplies' by construction service recipient, forincorporation in construction would neitherconstitute non monetary consideration to serviceprovider nor form part of gross amount chargedfor service provided. Consideration meanreasonable equivalent for other valuable benefitpassed on by promisor to promisee or bytransferor to transferee. Reference Answered.[2013(32) STR 49 (Tri. LB)]

v Mandap Keeper service availed for annualday function eligible for input service credit:Annual day function attended by employees andtheir family members as well as employees oftheir sister units. Annual Day function of appellantcompany is an integral part of the businessactivity. [2013(32) STR 95 (Tri. Mum)]

v Shifting of raw material and cleaning offactory premises not job work: Show CauseNotice was issued contending that the Appellantwas providing Manpower Supply Service.Appellant contended that the manpower was notsupplied but job work was undertaken for shiftingof raw material and cleaning of factory. It washeld that shifting of raw material and cleaning offactory can not be considered as job work. Pre-deposit ordered. [2013(32) STR 83 (Tri. Mum)]

v Input service credit available when useddirectly or indirectly in manufacture of finalproduct: Directly or indirectly has wider import.Service need not be a service which is directlyused in manufacture of final product. Use whichis indirect and in or in relation to manufacture offinal products has widened scope and purviewof entitlement. [2013(32) STR 31 (Bom.)]

v Input service credit not available whenmanufacturing of product abandoned: Inputservice is a service which is used by amanufacturer directly or indirectly, in or in relationto manufacture. Having abandoned the plan ofmanufacture of product, cenvat credit on theservices rendered by consultant on this specificproduct is not admissible. [2013(32) STR 79(Tri. Ahmd.)]

v Stricture against CESTAT for dismissing the

appeal for non compliance of stay order whenappeal against said stay order was pendingbefore HC: Dismissal of appeal by Tribunalduring the pendency of appeal before HC wherestay order passed by Tribunal was challenged.Appeal dismissed due to non compliance of thecondition of stay order, despite request foradjournment to await order of the HC. Order ofthe Tribunal stayed. [2013(32) STR 177 (Bom.)]

v Penalty Not imposable when SCN for demandheld time barred. [2013(32) STR 179 (Tri. Del.)]

v Students can not be treated as client towhom recruitment or manpower supplyservices rendered: Fee collected for theservices of providing employment with variouscompanies firms to students after completion ofcourse. To attract service tax under Manpowersupply service, services to have been renderedto clients. Students can not be treated as clients.[2013(32) STR 229 (Tri. Bang.)]

v Lunch and dinner to buyer's delegation /conferences relatable to manufacture ofgoods: Proposal for denial of service tax crediton foods and hospitality services rendered byhotel. Providing lunch / dinner to customers ispart of business promotion and is not part of saleof manufactured goods. Without promoting thesale of the product, the manufacture also cannot take place. [2013(32) STR 225 (Tri. Ahmd.)]

v Corrigendum to SCN - When time limit fordemand inapplicable: Corrigendum to SCNconveying only arithmetic recalculation of allegedliability and not making any fresh attribution offact or law. It was held that corrigendum did notsubstantially alter the framework of SCN anddemand could not be said to be barred bylimitation. [2013(32) STR 179 (Tri. Del.)].

v Failure to mention IEC Code on courieragency's invoice -Exemption underNotification No. 17/2009-S.T. Not available:Refund claim of Appellant under provisions ofNotification No. 17/2009-S.T. Exemption wasavailable subject to fulfillment of conditionregarding specification of IEC number of exporterin courier agency receipt. Imposed condition wasnot satisfied therefore, appeal rightly rejected.[2013(32) STR 222 (Tri. Del.)].

v Time barred appeal ought not to have beenconsidered on merit: Appellate authority could

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not have considered the appeal on merits whereappeal was filed beyond the statutory period.[2013(32) STR 242 (Tri. Bang.)].

v Cenavt credit cannot be used for dischargingthe liability in Import of Service: Appellant wasavailing services from foreign commission agent,paid service tax from their Cenvat credit accountinstead of paying in cash. Rule 5 of Taxation ofServices (Provided from outside India andreceived in India) Rules, 2006 were brought intoexistence w.e.f. 19.04.2006. And deemingprovision stands withdrawn form 19.04.2006.Appellant do not have prima facie case, directedto deposit entire amount of duty. [2013(32) STR231 (Tri. Del.)]

v Cenvat credit of General Insurance serviceadmissible: Insurance service was related toinsurance covering issue plant, machinery andinventories. Such coverage is in relation tomanufacture. [2013(32) STR 256 (Tri. Del.)]

v Exemption to small service providers-Exempted part of service not computable inAnnual Turnover: Rent-a-cab service,abatement of 60% in terms of Nt. no. 1/2006-S.T., dated 01.03.2006. Exempted part of theservices should not be taken into account whilecomputing the total value of services for thepurpose of falling under SSI notification. Pre-deposit waived. [2013(32) STR 300 (Tri. Del.)]

v Refund of unutilized Cenvat credit for exportof exempted services grantable: Export of'software maintenance, development andconsultancy service by 100% EOU. Softwaremaintenance service utilized for providing servicewas taxable service. Rule 6(3)c providing cap ofutilization of 20% of service tax on taxable outputservice not applicable for exempted services.Therefore no bar on availing full credit for suchservice. [2013(32) STR 356 (Tri. Mum.)]

v Maintenance of residential colony providedby employer eligible for input service credit:If accommodation was not provided by companyto its employees at the remote location, it wouldnot be feasible for it to carry on its manufacturingactivity. Staff colony, provided directly andintrinsically linked to manufacturing activity.Services which are crucial for maintaining thestaff colony, had to be considered as inputservices. [2013(32) STR 288 (A.P.)]

v Services viz. due diligence of corporate entitiesconsidered for mergers / acquisitions, framingof terms and conditions of agreements,convincing etc. not in nature of advice orconsultancy in relation to financial managementbut squarely fits into legal service definition.[2013(32) STR 298 (Tri. Bang.)]

v No provision for lapse of AccumulatedCenvat credit: Credit accumulated prior to1.06.2007, utilized towards Service Tax Liability.No provision for lase of accumulated credit.C.B.E. & C circular No. 137/72/2008-CX.4, dated21.11.2008 also confirms accumulated credit notlapse and Rule 6(3) not bars utilization. [2013(32)STR 294 (Tri. Mum.)]

v Undue hardship to be proved for waiver ofpre-deposit: Undue hardship is a matter ofwithin special knowledge of applicant and has tobe established by him. Mere assertion is notsufficient. For hardship to be undue it must beshown that particular burden to be observed orrequirement performed was out of proportion tonature of requirement itself and benefit whichapplicant would derive from compliance with it.[2013(32) STR 257 (Tri. Mad.)]

v Holding company and subsidiary companyare separate and distinct legal entities: Everycompany has independent right to file applicationbefore the AAR for pronouncement of anadvance ruling on the questions raised in theapplications.[2013(32) STR 271 (Guj.)]

v Appeals relating to classification of serviceunder particular heading lies to SupremeCourt and not to High Court: High Court hasno jurisdiction to entertain such appeal underSection 35G of Central Excise Act, 1944 asapplicable to Service Tax vide Section 83 ofFinance Act, 1994. Such questions shall beadjudicated by the Apex Court under Section 35Lof Central Excise Act, 1944. [2013(32) STR 265(Kar.)]

v Where the expenditures shown in books ofaccount there is presumption that the serviceis availed in relation to their business: Cenvatcredit on Rent-a-cab Service, contract busservice and telephone service. No distinction canbe made between the factory and corporateoffice. If there is no management by corporateoffice, a manufacturing organization can not,

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survive. Many services received by corporateoffice is listed specifically in the inclusive portionof definition of Input Service. [2013(32) STR 435(Tri. Chennai)]

v Taxability of composite contracts - Matterreferred to 5 Member Larger Bench ofTribunal: Composite contract - involving transferof property in goods and services of executionof works contract which became taxable from1.6.2007. whether for prior period such contractscould be vivisected and service componentssubjected to tax under other pre-existing taxableservices such as commercial or industrialconstruction service- Reference to larger benchof five members. [2013(32) STR 410 (Tri. Del.)]

v Laying of electric line, construction of sub-stationsand erection, installation and commissioning oftransformers under work contract. Prima facieissue covered by exemption notificationrequirement of pre-deposit waived. [2013(32)STR 409 (Tri. Bang.)]

v Plea of revenue neutrality - Penalty set aside:Recipient of marketing and managementconsultancy from overseas. Plea of revenueneutrality, strong plea as credit available onService Tax paid could be utilized for dischargeof Excise duty therefore no reason to avoidservice tax liability. [2013(32) STR 423 (Tri.Ahmd.)]

v Taxable event is providing of service, whichis point of time of execution of workscontract: For contracts executed prior to01.07.2012, when Section 66B of Finance Act,1994 was inserted providing rate of tax @ 12%,mere payment of bills for work already done after1.7.2012 would not alter applicability of law tocontractors prior to 1.7.2012. Notification No. 30/2012-S.T. Is not applicable to service providerwho is limited company and awarder of contractis not body corporate. [2013(32) STR 396 (Raj.)]

INCOME TAXv Income Tax under the head House Property -

The treatment of an income under the head"house property" is dependent upon the intrinsic

nature of the letting out and not on the fact ofmultiple agreements execution. All theagreements are executed on the same day andassessee has given a plausible reason fordrawing different agreements for letting the samehouse property. Rent there from are liable underthe head income from house property, eligiblefor statutory deduction u/s 24(a). [2013-TIOL-1023-ITAT-DEL]

v Disallowance of various expenditure - Interestpaid @ 14% to Director correctly considered asexcessive when interest on loan borrowed fromother person range at 8% to 9%. It is for thebusinessman to decide the prudency andnecessity of the expenses and the AO cannotenter into the shoes of the businessman anddecide what expenditure should and should notincur for the business purpose. The fact that atrade mark after registration could be separatelyassigned, and not as a part of the good will ofthe business only, does not also make theexpenditure for registration a capital expenditure,that is only an addition and incidental facility givento the owner of the trade mark. The expendituresare revenue in nature. [2013-TIOL-1007-ITAT-AHM]

v Expenditure, whether Capital or revenue -After closure of the business only the expenditurerequired for maintaining the corporate Identityof the business can be allowed. Technical feesfor technical collaboration for a project whichnever became viable will be capital expenditure.[2013-TIOL-1010-ITAT-MUM]

v Section 80HHC - Income received from servicesrendered outside India would not constitutereceipt of a nature similar to rent, brokerage,commission or Interest and hence is not liable tobe reduced to the extent of 90% from the profitsof the business to derive the benefit of section80HHC. [2013-TIOL-954-HC-KAR-IT]

v Bad debts - Bad debts written off in books ofaccount can be granted as an allowableexpenditure. [2013-TIOL-951-HC-MAD-IT2013-TIOL-951-HC-MAD-IT]

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v Commissioner of Central Excise Indore JaiPrakash suspended after allegation of involvement in smugglingcase booked by DRI-AK Pawar posted as Commissioner Central Excise Indore

v Income Tax refuses Nokia's offer to pay Rs 2250 Crore as tax

v Deputy Commissioner of Customs ICD Dadri Noida Shashi Kant arrested by CBI while taking bribe of Rs5 Lakh-Cash of 15 Lakh & Gold Brick recovered from his residence

v Intern who alleged sexual harassment by retired SC Judge did not turn up for recording of her statementbefore 3 Judge Panel

v Income Tax Officer S Vanam& Tax Consultant MehboobShailkh arrested by CBI in Mumbai while acceptingbribe for clearing Income Tax return without scrutiny

v Chief Commissioners of Customs & Excise RK Singh, PS Pruthi & R Perisami selected for appointment asMember(Technical) in CESTAT

v SC allows E-auction of 11.48 MT extracted Iron-Ore in Goa-SC sets up 6 Member Panel for fixation ofannual cap on Iron-Ore mining in Goa

v Kusum Satpathy appointed as Chairperson of Customs & Excise Settlement Commission

v AK Gupta joins as Chief Commissioner Central Excise Delhi-Mahender Singh as CC CX Meerut-RK Singhas CC CX Ahmedabad-Jayant Misra is CC Vadodara CX-Chander Bhan as CC CX Lucknow-NK Bhujwalas CC CX Patna-RK Singla is DG Safeguards-S Ramesh is CC Chennai Customs-HK Chaturvedi is CCKolkata Customs

v Manufacturing units in SEZs allowed to sub-contract work for up to three years, instead of just one yearallowed so far

v V Somasundaran appointed as Pharma Secretary-RP Watal is Secretary Expenditure

v India slips below Bangladesh & Nepal in World Prosperity Index

v India ranked 69th in new Global Corruption Index

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HEAVEN JOKE

A man died and went to The Judgement, they told him,"Before you meet with God, I should tell you - we'velooked over your life, and to be honest you really didn'tdo anything particularly good or bad. We're not reallysure what to do with you. Can you tell us anything youdid that can help us make a decision?"

The newly arrived soul thought for a moment and replied,"Yeah, once I was driving along and came upon a personwho was being harassed by a group of thugs. So I pulledover, got out a bat, and went up to the leader of thethugs. He was a big, muscular guy with a ring piercedthrough his lip. Well, I tore the ring out of his lip, and toldhim he and his gang had better stop bothering this guyor they would have to deal with me!"

"Wow that's impressive, "When did this happen?"

"About three minutes ago," came the reply.

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